Convergys Corporation to Incur One-Time Special Charges in Fourth Quarter 1999; Earnings Outlook for Quarter, Excluding One-Time Charges, Remains Unchanged.

Business Editors

CINCINNATI--(BUSINESS WIRE)--Jan. 12, 2000

Convergys Corporation (NYSE:CVG), the global leader in providing outsourced, integrated, customer care and billing, announced today it expects to record certain one-time special charges in the fourth quarter ended December 31, 1999.

The company today disclosed that it expects to report special one-time charges originating from its 45 percent equity interest in its Cellular Partnership with SBC Communications. The one-time charges recorded by the Cellular Partnership result from the merger of SBC and Ameritech that closed in October 1999. As a result of the merger, SBC management recently notified Convergys that it has decided to modify the Cellular Partnership's network technology to be consistent with that employed by SBC, and that this would result in equipment write-offs at the partnership. SBC indicated that the technology changes were being implemented to allow the Cellular Partnership to compete more effectively through improved area coverage and lower cost of service. SBC also notified the company that the Cellular Partnership would record charges to conform its accounting to policies followed by SBC. The resulting equipment write-offs and accounting change are expected to reduce Convergys' earnings from the partnership for the fourth quarter of 1999 by approximately $0.05 per diluted share.

Separately, Convergys indicated that it would record one-time charges related to its own operations in the fourth quarter of approximately $0.03 per diluted share. The one-time charges are primarily for the consolidation of the company's Jacksonville, Florida data center into its Orlando, Florida data center, centralization of certain staff organizations and the write-off of purchased software that the company has decided that it will not deploy into its customer contact centers. These charges result from an evaluation of synergistic opportunities that began in early 1999 after the company's spin-off from Cincinnati Bell and were previously disclosed in the company's financial filings. The synergies are expected to result in annual cost savings approaching $5 million. Additionally, the company announced that it realized a non-recurring investment gain in the fourth quarter of approximately $0.01 per diluted share. The net result of the one-time charges and the non-recurring gain is expected to be a one-time reduction in earnings of approximately $0.02 per diluted share.

Combined, the one-time charges expected to be taken by the Cellular Partnership, the company's consolidation charges and the non-recurring investment gain would reduce earnings for the fourth quarter by approximately $0.07 per diluted share.

The company also disclosed that revenue and operating income growth remained strong in the fourth quarter and that, excluding the one-time items, it expects results for the quarter to meet consensus estimates.

Steve Rolls, Convergys' Chief Financial Officer stated, "The one-time charges related to the Cellular Partnership are not unusual in the wake of a transaction such as the SBC-Ameritech merger. We are confident that SBC, as the new general partner of the Cellular Partnership, will take actions to increase the value of our investment. The actions that we are taking with respect to our core operations are primarily to improve efficiency in serving our clients by taking advantage of the synergies that exist within our businesses. We anticipate that these actions will result in annual cost savings approaching $5 million. Both business groups, CMG and IMG, have experienced rapid growth in the past year, and we believe this trend should continue."

ABOUT CONVERGYS

Convergys Corporation (SM) is the global leader in providing outsourced, integrated, customer care and billing services, bringing together world-class resources and expertise to help clients transform customer relationships into a competitive advantage.

Convergys software produces more than one million bills each day, and Convergys call centers handle more than one million calls each day.

Convergys provides customer care, billing and employee care services to the top companies in a wide range of industries, including communications, Internet, cable and broadband, technology, consumer products, financial services, utilities, healthcare and hospitality.

Headquartered in Cincinnati, Ohio, Convergys employs over 35,000 people in its 35 call centers and in its data centers and other offices in the United States, Canada, and Europe. Convergys is on the Internet at convergys.com

Convergys is pronounced "kun VER jis." Convergys and the Convergys logo are service marks of Convergys Corporation.

NOTE:

Information included in this news release contains forward-looking statements that involve potential risks for Convergys Corporation. The future results of Convergys could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, the loss of a significant client, difficulties in completing or integrating acquisitions, Year 2000 compliance, and other factors disclosed in the Form 10-K for the year ended December 31, 1998, filed with the SEC by Convergys Corporation.